Saving Taxpayer Dollars

By Tony Kontzer  |  Posted 2011-04-06

As the fiscal struggles of the nation’s federal, state and local governments have deepened over the past several years, a silver lining has emerged: Agencies at all three levels have been getting much smarter about how they spend their IT dollars.

Government agencies’ growing awareness that they can improve what IT delivers without spending more will be especially helpful in 2011 as IT budgets flatline before an expected return to more normal growth. According to government market research firm INPUT, total IT spending by local, state and federal agencies will dip slightly to $156.1 billion in 2011 (down from $156.5 billion during 2010), before experiencing modest annual growth that will see that figure rise to $189.5 billion in 2015.

See also Management Principles for Uncle Sam

Government IT leaders hope that the penny-wise decisions they’ve been making are providing a foundation for smarter investments as purse strings loosen in the coming years. Toward that end, agencies and municipalities have been turning to technologies—or, in some cases, organizational methodologies—that can stretch their IT dollar while setting the stage for adding future capabilities.

See also Cloud Computing for Government

“If you have a strong story as a technology vendor or provider about how to spend the same dollar but get more return for it, you’re going to be well-received in government IT departments today,” says Dana Gardner, president and principal analyst for IT consultancy Interarbor Solutions.

In particular, categories such as cloud computing, IT support and analytics have emerged as areas where governments can make investments that pay dividends quickly by delivering improved functionality and business agility.

Here’s how IT organizations at three levels of government have been squeezing more value from their IT spends.


Nearly a decade ago, the U.S. Forest Service was hampered by a disjointed IT environment that required each district office to provide its own IT support, overwhelming IT staff and leaving users dissatisfied. Also, the ineffective help desk setup was pulling the agency’s 36,000 employees away from the activities that had led them to join the Forest Service, says Dana Watts, IT specialist and customer help desk operations lead for the Forest Service, one of the U.S. Department of Agriculture’s largest agencies.

“Employees don’t want to be inside, waiting for someone to fix their computers, or waiting on the phone for someone to route them to the right person,” Watts says.

To consolidate its help desk operation, improve the user experience and save money, the agency outsourced its Tier 1 call center to IBM, signing a five-year deal in 2002. The service improved things, but it lacked an online self-service component. Also, an inflexible contract forced it to pay stiff penalties for amending the agreement on the fly.

Once the contract expired, it was extended two years while the Forest Service searched for a new solution, ultimately again awarding the contract to IBM. However, this time, the vendor proposed a cloud-based solution that included components provided by subcontractors, such as an incident management system from RightNow Technologies. The new contract specified that the Forest Service would pay only for incident volume.

The results speak for themselves: Since 2006, the Forest Service has increased the portion of inquiries it resolves on first contact from 45 to 60 percent. And, over the first two years of the new contract, the volume of help desk inquiries—about 25,000 each month—has decreased by 10 percent. It’s compelling evidence that Forest Service employees are increasingly solving their own issues using the online self-service environment, which features a knowledge base of some 30,000 documents. In addition, amendment penalties have been all but eliminated.

Users aren’t just taking from the system—they’re giving back, too. Watts says employees are providing feedback on their support experiences an impressive 20 percent of the time, and that feedback forms the basis of quarterly configuration updates to the help desk system.

“They can actually see and touch the changes we’re making based on the information they’re giving us,” says Watts, who looks forward to squeezing even more out of the system as the agency becomes more familiar with its capabilities.


Few things are more crippling to local government than a broken e-mail system. Just ask Brad Barnell, IT director for Greenwood County, S.C. The county’s 300 e-mail users weren’t even on the same system. Like most counties, Greenwood was cash-strapped, so only the power users—about one-fourth of county employees—were on Microsoft Exchange, while the rest were supported by a free Unix-based product called SquirrelMail.

The county’s IT staff, which consisted of three people, had to pay a vendor about $18,000 a year to manage the environment. To make matters worse, the e-mail addresses weren’t consistent, spam was rampant and e-mailed inquiries from the public were falling through the cracks.

Barnell reached out to Google, which referred him to Cloud Sherpas, a systems integrator that specializes in migrating organizations to Google Apps and Google Mail. The county moved all its users to Google Mail, for annual fees of $15,000 for 300 Google Apps licenses—$3,000 a year less than it had been paying its vendor for e-mail maintenance.

“It takes all those hours that were going to be spent on e-mail and lets us use them on other projects,” Barnell points out. Those projects include developing a Web presence to give the public access to services online, more training for staff on other technologies, and migrating software into a new data center.

Barnell hopes to leverage the other Google Apps tools—Google Talk, Google Calendar, Google Docs and the rest—to reduce on-premises storage requirements in the new data center. “The cloud is perfect for us,” he says.


Like many states, Utah had allowed each agency to develop its own IT footprint, and the resulting redundancies and service duplications made it impossible for the state to know what it was spending on technology.

“The way they did accounting for each of the agencies, there wasn’t even an IT line,” says the state’s CIO, Stephen Fletcher. “There were program lines, such as Medicaid, with all IT costs embedded into overall program costs.”

Things came to a head when state officials received a request for a new document management system that was identical to one they’d just approved for another agency—and the requesting agency bristled at the state’s suggestion that the two agencies share the system. So the state passed legislation mandating an IT cost-cutting initiative that would pull IT out of individual agencies and consolidate it into a centralized organization, with Fletcher having final say on all IT purchases statewide.

Over the next 18 months, IT was reorganized, and cost-cutting efforts began. Fletcher had his staff go through everything, establishing a baseline cost and performance objective for each.

The IT organization’s first target was data center consolidation. The 35 data centers were scaled back to two—a primary data center and a backup facility—both with virtualized machines that leave the state well-positioned to deliver cloud-based services. For a one-time $4 million investment, Utah is reaping $4 million annually in reduced operating costs, shaving more than 25 percent from its previous data center budget.

Fletcher and his staff then considered IT security, which was plagued by gaps. They also deployed a system to manage help desk tickets, purchasing and asset management so that agencies would know what they were spending on IT; adopted a single suite of software development tools to ensure a consistent methodology; introduced hundreds of online applications that citizens can use to access services; and installed a data warehouse fronted by the latest business intelligence tools so agencies could slice and dice information.

Along the way, Fletcher also reduced the state’s IT staff from 1,000 to 750 people through attrition, slashing another $25 million in annual IT spending.

Fletcher is now looking to further reduce operating costs with desktop virtualization and converged communications, and by retiring mainframes. He’s also considering joining with other states to create a single pool of geographic data that could greatly reduce storage costs, and he’s open to obtaining additional services from other governments or agencies.

Fletcher believes his holistic approach to IT works better than simply making across-the-board IT cuts. Using technology and consolidation to help reduce the state’s overall budget by 10 percent has a much larger impact than just shaving 10 percent from the IT budget. “Every state is trying to put a model together to make that happen,” says Fletcher. Count Utah among those that have figured it out.


Like Utah, the state of Montana needed to transform its outdated data center, which was housed in the basement of a 1940s-era building that was a nightmare to secure and was plagued by antiquated, inefficient power and cooling resources. In 2005, incoming Governor Brian Schweitzer toured the data center and, according to CIO Dick Clark, declared, “Now I’ve got one more thing to worry about.”

Five years later, Clark’s staff had completed the migration to a new primary data center with top-of-the-line security, a strong foundation for future cloud computing initiatives and energy efficiency that other data center operators will envy.

The key to the reduced energy footprint is a component that’s brought the facility the most notice: a “heat wheel” from KyotoCooling that reduced cooling costs to between 7 cents and 12 cents for each dollar of electricity used—down from as high as $1.50. “I think it’s going to be the norm in the relatively near future,” says Clark.


New York City is also undergoing an ambitious data center renewal. Over the next four to five years, the city will consolidate more than 60 data centers—most of which are agency-specific—into a single data center environment that will likely be spread across two or three facilities. IBM will lead the first phase of the project, migrating the first six to 10 agencies into the new facilities.

Jim Fowler, first deputy commissioner of New York City’s Department of Information Technology and Tele-communications, says the $96 million effort will pay for itself by the time it’s completed, and that it will yield ongoing operational savings of $40 million a year through improved efficiencies, technology standardization and reduced staffing needs, along with lower power, cooling and real estate costs.

Fowler believes that agencies at all levels of government will be watching the project closely to learn anything that will help them with their own data center consolidations. “We have no choice but to be on the main stage because of our size and scope,” he acknowledges.